Skymark Creditors to Choose Between Two Revival Plans in Tokyo

Skymark Airlines Inc.’s creditors will vote Wednesday on competing rehabilitation plans that will determine whether the carrier will be backed by a Japanese airline or an American one in its return from bankruptcy.

Creditors will meet in Tokyo to choose between a plan from Skymark that envisions ANA Holdings Inc., owner of Japan’s biggest airline, as sponsor, or one from Skymark’s largest creditor that relies on the backing of Delta Air Lines Inc.

To pass, a plan must be approved both by a majority of creditors and by creditors who hold more than 50 percent of Skymark’s debts. A plan that fulfills just one of the conditions will be rescheduled for another vote within two months.

Tokyo-based Skymark, which filed for bankruptcy protection in January with liabilities of about 300 billion yen ($2.4 billion), is seeking to return to profitability by paring costs and ending the use of twin-aisle aircraft.

The carrier ran short of cash while trying to pay for Airbus Group NV A380 superjumbos it had ordered.

Competing Plans

Earlier this year Skymark and private-equity firm Integral Corp. put forward a plan sponsored by ANA Holdings, parent company of All Nippon Airways Co. Under the plan, ANA would support Skymark through code-sharing, joint purchases, flight operation management and aircraft maintenance.

“We are confident that Skymark’s original plan, which includes ANA’s sponsorship, is the best plan,” ANA spokesman Ryosei Nomura said by e-mail Tuesday.

Skymark’s biggest creditor, Intrepid Aviation Ltd., said that plan was “not in the interest of all parties,” and proposed an alternative together with Delta. Delta has said it would consider a codeshare agreement with Skymark, Japan’s third-largest airline.

Both plans would inject 18 billion yen into Skymark, with 15 billion yen being used to pay off creditors, a repayment rate of just 5 percent on the carrier’s debts. Integral, which has been overseeing Skymark’s rehabilitation, said it already has given the airline 4.5 billion yen.

Same Same but Different

Minoru Matsuno, president of Value Search Asset Management Co., a Tokyo-based investment advisory firm, said the two plans were comparable.

“In respect of moving toward re-listing, which is Skymark’s ultimate goal, there’s not a big difference,” he said. “ANA and Delta are both giant and first-class airlines. Both companies have advantages and disadvantages.”

Delta declined to comment before the vote, Atlanta-based spokeswoman Keyra Lynn Johnson said.

Skymark and Integral declined to comment before the vote. Intrepid didn’t respond to requests for comment.

(Chris Cooper & Kiyotaka Matsuda - Bloomberg Business)